(Bloomberg) --

Middle Eastern stock markets were mixed as investors attempted to reconcile concerns about high valuations with more positive economic indicators.

Saudi Arabia’s benchmark Tadawul All Share Index fluctuated, dropping as much as 0.8% on Sunday before trimming losses.

“The macro story in Saudi Arabia is much more interesting than the micro story,” said Tarek Fadlallah, the chief executive officer of Nomura Asset Management’s Middle East unit, who said he’s cautious about high valuations in Saudi Arabia.

The Tadawul has been rallying for six weeks, the first such gain since September 2020, trading at the highest levels in seven years. Higher oil prices and government programs have been supporting Saudi stocks.

Among Saudi companies, “there’s been very little restructuring. There’s been very little advancement in terms of the profitability of individual companies,” Dubai-based Fadlallah said in an interview with Bloomberg TV. Returns on equities for Saudi-listed companies are “down 50% for listed Saudi stocks over the last decade or so, and it’s very difficult to see how that’s going to turn around.”

Other markets in the region were mixed. Exchanges in Dubai, Oman, Egypt and Israel tracked global peers, which tumbled on Friday as the Federal Reserve’s surprise hawkishness upended the reflation trade that has dominated markets this year. Indexes in Kuwait, Qatar, Abu Dhabi and Bahrain rose.

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  • Dubai Financial Market General Index falls 0.4% at 11:42 a.m. local time
    • Dubai Islamic Bank -1%; Emirates NBD -0.4%; Emaar Properties -0.5%
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  • Bahrain Bourse All Share Index jumps as much as 0.5%, supported by Batelco

    • READ: Batelco Jumps to Highest Since 2008 Amid Dual Listing Plans
  • Tadawul All Share Index little-changed at 10:44 a.m. in Riyadh

    • READ: Aramco Closes $12 Billion Pipeline Deal With China, UAE Backing
  • Kuwait Premier Market Index gains most in the Gulf, supported by banks

    • Kuwait Finance House +0.5%; Ahli United Bank +1.3%; National Bank of Kuwait +0.4% at 10:47 a.m.


  • “Flourishing activity and higher oil prices are boosting Saudi and UAE banks’ valuations to pre-virus levels,” Bloomberg Intelligence analysts Edmond Christou and Philip Richards write in a note, adding that Kuwaiti lenders’ earnings are slowly recovering

    • Notes that medium-term prospects are brighter for Saudi and Qatari banks

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